1: http://www.ebri.org/pdf/surveys/rcs/2015/EBRI_IB_413_Apr15_RCS-2015.pdf

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milliman.com September 8, 2015

Office of Regulations and Interpretations

Employee Benefits Security Administration

Attn: Conflict of Interest Rule

Room N-5655

U.S. Department of Labor

200 Constitution Avenue, N.W.

Washington, DC 20210

Office of Exemption Determinations

Employee Benefits Security Administration

Attn: D-11712

U.S. Department of Labor

200 Constitution Avenue, N.W.

Washington, DC 20210

RE: RIN 1210 –AB32 – Proposed Conflicts of Interest Rule

ZRIN 1210-Za25 – Proposed Class Exemption 

Ladies and Gentlemen:

Following the August 2015 hearings relating to the above-referenced Notice of Proposed Rulemaking 

on Definition of Fiduciary; Conflict of Interest Rule-Retirement Investment Advice and Related 

Proposed Prohibited Transaction Exemptions (the “Proposed Rule”), Milliman is taking this 

opportunity to provide comments and suggestions to the US Department of Labor (the “DOL”) 

related to the Proposed Rule’s content. As a global consulting firm, we provide a wide variety of 

services related to the retirement industry.

There is much evidence that Americans’ retirement security and retirement confidence1is in crisis 

and that updating the 1975 DOL Regulations could have a positive impact on the investing public’s 

ability to prudently plan and save for retirement and their ability to convert retirement savings into a 

lifelong income stream following retirement. 

However, we respectfully disagree that expanding the definition of a fiduciary, providing carve-outs 

and exclusions, and creating an unnecessarily complex “Best Interest Contract Exemption” for 

prohibited transactions will meet this intended public policy goal.
Office of Regulations and Interpretations,

Office of Exemption Determinations,

Employee Benefits Security Administration

September 8, 2015

Page 2 of 4

We regard conflicts of interest and fees that are not transparent as problematic in the retirement 

industry. The investing public, that is, millions of individual savers, should be able to access 

professional investment advice with a clear understanding of the products, services, and fees in 

advance of entering into any advisory relationship. 

The national trend has already moved toward retirement plans that are directed by individuals, rather 

than through employers’ defined benefit pension plans. Investment, longevity, inflation and liquidity 

risks have been transferred to individuals, making it crucial that each future retiree be able to obtain 

information tailored to that individual’s needs. By broadening the scope of investment advice and the 

definition of fiduciary, we submit that the Proposed Rule would limit individuals’ access to this 

crucial information. 

Service providers —facing complicated rules and risks associated with being a fiduciary— may 

choose not to work with individuals with small or modest accounts. This would leave our country’s 

most precarious investors without vital sources of information they need to be successful in 

retirement. 

With approximately 800 comment letters and four days of public hearings, the DOL has much to 

consider. Rather than reiterating arguments provided by other commenters, we at Milliman offer 

some practical suggestions on modifications to the Proposed Rule. 

Maintain and broaden the existing definition of Investment Education

We suggest that most of Interpretive Bulletin 96-1 be preserved. Doing so permits call center 

personnel of recordkeepers to continue to provide limited information relating to investment 

and distribution options to plan participants, without being deemed a fiduciary. We know by 

experience with our own clients, with whom we partner in defined contribution plan 

administration, that the call center is often the sole source of information available to a plan 

participant. In particular, small investors rely on these call center employees to provide basic 

information on available fund selections, risk factors, and asset allocations. 

It is also common for plan participants to obtain information related to investment options and 

distribution options directly from an employee of their employer. Including these Plan 

Sponsor employees as fiduciaries would end this practice and eliminate a basic source of 

information that is particularly vital to the small investor, who cannot access other sources of 

investment information. Therefore, we suggest the Proposed Rule be amended to clarify that 

these employees can provide Investment Education consistent with the guidance of 

Interpretive Bulletin 96-1 without being deemed a fiduciary.
Office of Regulations and Interpretations,

Office of Exemption Determinations,

Employee Benefits Security Administration

September 8, 2015

Page 3 of 4

In addition, information regarding the mechanics of roll-overs, distributions, or loans from a 

plan should be excluded from the definition of Investment Advice and should be considered a 

part of Investment Education. Merely obtaining information on the procedure for effecting a 

roll-over, distribution, or loan should not be included. 

Variable annuities within Individual Retirement Accounts

Enabling American workers to accumulate assets is only a part of the public policy goal; the 

other part is the prudent use of the individual’s portfolio to buy goods and services throughout 

retirement. Investors are concerned with ensuring that their retirement assets last for their 

lifetimes. Milliman is an actuarial consulting firm and both the undersigned are credentialed 

actuaries, which makes us quite familiar with the evidence that average life expectancy has 

increased by several years when compared to studies conducted over several prior decades. 

The use of variable annuities is a valuable method of ensuring this lifelong stream of income. 

As with fixed annuities, variable annuities increase retirement security, and variable annuities 

within IRAs should also remain subject to Prohibited Transaction Exemption 84-24.

Grandfather existing variable annuity and mutual fund investments

We urge that a thoughtful grandfather provision for legacy variable annuity and mutual fund 

investments held in retirement plans be incorporated into the Proposed Rule. For example, to 

protect existing investors, if there is no change to proposed treatment of variable annuities, 

then recommendations to “re-allocate” or “hold” current variable annuity and/or mutual fund 

investments through IRAs should be specifically grandfathered.

Increase the implementation timeline

Should the Proposed Rule be implemented in its current form, it would require a dramatic 

shift in business processes throughout the retirement industry. We respectfully submit that 

eight months to implement these changes is technically impossible and inconsistent with 

transition timelines imposed by federal agencies for new regulations. The implementation of 

the rule should be phased in over a number of years. Specifically, the contract, conflicts of 

interest and disclosure requirements of the best interest contract exemption should be phased 

in during a period of no less than three years from when the rule is finalized.

Milliman provides many types of services that would be impacted by the Proposed Rule; we provide 

recordkeeping services and investment advice to various plan sponsors, we work directly with a large 

portion of insurance companies globally, and we provide risk management and hedging strategies to 

various SEC-registered products. 
Office of Regulations and Interpretations,

Office of Exemption Determinations,

Employee Benefits Security Administration

September 8, 2015

Page 4 of 4

We work diligently to make sure our services are high quality and our primary goal is to serve the 

best interests of our clients and the owners of the savings plans. The Proposed Rule as drafted does 

not serve the best interests of our clients, the investing public as a whole, or DOL public policy goals.

Our thanks to the DOL for your time to read our comments. We are available to answer any questions 

you have. Mr. Mungan can be reached at Ken.Mungan@milliman.com. Mr. White can be reached at 

Steve.White@milliman.com

Respectfully submitted,

______________________________ ______________________________________

Ken Mungan Stephen White

Chairman of the Board Chief Executive Officer